Don’t Call It a Counterfeit, and Other Recommendations from the IOM Report on Falsified and Substandard Drugs

This week, the Institute of Medicine (“IOM”) released its report, commissioned by the FDA, “Countering the Problem of Falsified and Substandard Drugs.” The objective was to gain an understanding of the “global public health implications of falsified, substandard, and counterfeit pharmaceuticals.” The lengthy report detailed twelve recommendations for international regulatory authorities as steps to combat the proliferation of falsified and substandard drugs throughout the world. These recommendations, in brief, are:

Governmental establishment and strengthening of systems to identify substandard, falsified, and unregistered drugs;

Creation of “investment vehicles” for manufacturers interested in “upgrading” their systems to international standards;

Development of plans for procurement agencies to comply with the World Health Organization (“WHO”) Model Quality Assurance System;

Use of a uniform document format for product registration by regulatory authorities in low- and middle-income countries, and creation of joint inspections, for harmonized procedures and reduced manufacturing costs;

Support by the governments in low- and middle-income countries for stronger international manufacturing and quality control standards;

Funding for public education campaigns on the dangers of falsified and substandard medicines;

Stronger licensing standards for wholesalers and distributors, including establishment of a public licensure database to be maintained by FDA;

Congressional authorization and funding of a “mandatory track and trace” system to be implemented by FDA;

Funding of a national repository of technology used to detect substandard and falsified medicines; and

Creation of a “code of practice” for the international problem of substandard medicines.

Substandard, falsified, and unregistered drugs are, as the IOM report acknowledges, a global problem, and there is no single solution to immediately fix the global issues involved, such as poor quality ingredients, lack of regulation, and drug diversion. The IOM report’s suggestions for less-developed countries, if put into practice, would likely only provide a partial solution to the problem. At a later date, we may post on the global recommendations provided by the IOM. For now, we focus on the most noteworthy domestic-related issues raised by the report.

IOM recommended excluding the use of the term “counterfeit.” There is disagreement in the international regulatory community as to whether “counterfeit” refers broadly to something that is “not what it claims to be,” or whether the narrower, legal definition, which focuses on trademark infringement, is applicable. The IOM report forgoes the use of the term “counterfeit,” and instead encourages the use of the terms “substandard,” “falsified,” and “unregistered.” “Substandard” drugs are “those that do not meet the specifications given in the accepted pharmacopeia or in the manufacturer’s dossier.” However, what is considered “substandard” varies from country-to-country, despite the fact that many countries use standards provided by international pharmacopeias. “Falsified” drugs are “those drugs that carry a false representation of identity or source or both,” and the report is clear to note that falsified drugs are often also substandard drugs. Falsified drugs can range from a legitimate product in fake packaging, or a fake product in legitimate packaging. Lastly, “unregistered” drugs are “those not granted market authorization in a country.” Unregistered drugs, unsurprisingly, are often substandard and are distributed outside the normal, regulated distribution channels. These definitions, if adopted domestically and internationally, will help regulatory agencies and industry alike characterize the specific problem when “bad drug” issues arise, and provide more clarity to this global problem.

The IOM also recommends creation of a centralized public database of suspended and revoked wholesale pharmaceutical licenses. The report recommends that FDA create this national database in collaboration with existing state licensing boards. While a “one stop shop” for this information could prove beneficial to industry, it is unclear how IOM expects FDA to implement such a large program, especially within IOM’s recommended two-year timeframe. While Congress could allocate funds for the creation of such a registry, FDA would also require the necessary statutory authority. While the Prescription Drug Marketing Act (“PDMA”) provides for creation of a state system of wholesale and manufacturer licensure, and tasked FDA with creating licensure guidelines, there is no federal licensure system. See 21 C.F.R. Part 205. Further, FDA would have to rely on the states to provide timely data. Many states already have online resources to perform simple searches to determine whether a company is licensed, and if so, whether there are any violations or issues with that license. A national database would be beneficial, but there currently does not appear to be a mechanism for FDA to manage this effort. For example, there is federal funding for state-level prescription drug monitoring programs, but there is no national or FDA-regulated federal program. Creation of a national wholesaler licensure database, whether or not in collaboration with state licensure boards, does not appear to be a task that FDA has either the resources or current authority to implement.

The IOM report also urges Congress to fund FDA and provide it with authority to create a mandatory track and trace system. As our readers know, Congress has been kicking around this idea for some time (see here). So far, however, there has been no real movement on the issue. FDA has had its eye on a track and trace system for almost 10 years (see here and here). Industry, too, would likely be receptive to a national “pedigree” system. However, any sort of track and trace legislation proposed by Congress would likely be met with harsh resistance from industry absent a federal preemption provision. IOM noted this concern, and the potential problems of a piecemeal approach. We can only imagine the regulatory quagmire and backlash from industry trying to comply with a federal pedigree, along with myriad state pedigrees. However, IOM recommends that FDA bring together “all industry stakeholders” to work together on the issue.

For its part, FDA has already issued a public statement on the IOM report, and stated that it is “transforming from a predominantly domestically focused agency to one that is fully prepared to help ensure product safety and quality within a globalized world.” How FDA will be able to meet these growing and changing needs, in addition to its many other functions, remains to be seen. Stronger regulation and quality oversight in other countries can only benefit the quality of products coming into the U.S., and progress towards a global solution to an increasingly global problem would be encouraging.